Ha'aretz has a fascinating account of teh negotiations and the final meeting between Ben-Elizier and Sharon. It closes :
Then the real debate began. Ben-Eliezer and Oshaya wanted the word settlement to appear. It was obvious to all that Ben-Eliezer needed the word to get Ramon, Mitzna, and the contrary faction off his back. But that's where Sharon had to dig his heels in. The founder of the settlements was unable, psychologically or politically, to even hint that the settlers would cease to benefit from government largesse.
Finally, Ben-Eliezer stood up pulled the letter of resignation from his pocket, and said, "thank you, Mr. Prime Minister." He laid the letter on the prime minister's desk and the Labor Party left the office and the government.
there's also an editorial in Ha'aretz that discusses what a drain the settlers are on the Israeili economy.
UPDATE: excellent summary of coverage within and outside Israel, at Slate.